LEVEE CHIEF DRAWS SCRUTINY.
POST-STORM CONTRACT, PAY ISSUE QUESTIONED

Thursday, October 20, 2005

By Frank Donze

Staff writer

Efforts by Orleans Levee Board President Jim Huey to steer two no-bid, post-Hurricane Katrina contracts to relatives and to collect nearly $100,000 in back pay for himself a few weeks before the storm has drawn the scrutiny of state officials and Huey's board colleagues, none of whom were consulted on the actions.

"I'm bewildered and deeply disturbed by what's happened," said Levee Board Commissioner Dan Foley, who said he learned about Huey's moves through newspaper accounts.

"What's been done may or may not be legitimate; I'm not prejudging anyone," Foley said. "But I'm concerned that this could go on without the knowledge of the full board."

In concert with Commissioner Eugene Green and City Councilwoman Cynthia Willard Lewis, who holds one of City Hall's two seats on the Levee Board, Foley said he is calling on Huey to give a full explanation of the back pay issue and provide an inventory of all contracts awarded by the agency since Aug. 25, the week before Katrina hit.

Foley, who wants the information to be presented at a meeting set for Oct. 28, also said he has consulted state Sen. Ed Murray, who, in turn, has asked the governor's office and the legislative auditor to conduct inquiries. Huey, Foley and Green are appointees of Gov. Kathleen Blanco.

Huey said he makes no apologies for his decisions to lease office space from board legal consultant George Carmouche, a cousin of Huey's wife, or to do business with Carmouche's son, Scott, whose newly formed company was given the authority last month to coordinate the salvage of boats damaged or destroyed by the hurricane at the Levee Board's two marinas.

Both contracts, Huey said, were awarded under emergency conditions in the hectic days after Katrina ravaged the agency's vast real estate holdings.

Huey said that on Sept. 1 -- two days after the storm came ashore -- he leased 3,000 square feet of office space in Baton Rouge from Carmouche to ensure that the agency's top managers would have a place to operate.

He said he authorized the six-month, $5,000-a-month agreement only after state government failed to provide him a base of operation and after he saw that all available property near New Orleans had been snatched up.

Huey said he was forced to move quickly on the salvage contract because the recovery of boats by insurance companies and owners was threatening to devolve into chaos along the Lakefront.

"I will stand behind any decision I have made," Huey said. "If I had not stepped up to the plate, I don't know what would have happened."

As for the back pay, Huey said he obtained legal opinions certifying that he was entitled to about $96,000 in unpaid compensation dating to June 19, 1996, the day he was chosen board president.

The separate legal opinions Huey cited were prepared by Carmouche and Gerard Metzger, a high school friend of Huey's who also works as a contract lawyer for the board. Huey did not request an opinion from the board's staff attorney.

"Anybody has the right to ask for an investigation to check all this out if they think there was any impropriety," Huey said. "But I can assure you, there was none."

'A unique situation'

At Huey's direction, Levee Board Managing Director Max Hearn signed the lease with Carmouche and his wife, Ann, to occupy a vacant suite in a building on Perkins Road that also houses Carmouche's law firm. In addition to the $5,000 monthly rent, the board is responsible for janitorial services, which totaled $337 in September, and utility costs, which were unavailable.

Huey said Carmouche suggested a month-to-month arrangement but that offer was rejected by the Federal Emergency Management Agency, which Huey said will reimburse the board for the lease payments.

"We were desperately looking for office space, but there was none," Huey said.

At the time he took the step, Huey said he had not been able to locate any board members or staffers. "It was only me and George, who I owe a tremendous debt of gratitude and so does this board," he said. "Without him we wouldn't be up and running."

"Is there a problem with George being a consultant? Under normal circumstances, of course there is. But this was a unique situation and where else could we go?"

Sinking feeling

Technically, the board has no contractual agreement with Marine Recovery and Salvage LLC, which was formed by Michael G. Mayer and Scott Carmouche on Sept. 8, about a week after Katrina struck.

Hearn said he authorized Marine Recovery to oversee the salvage operation by letter on Sept. 12. Citing a provision in state law that allows agencies to award no-bid contracts, Hearn wrote that he was authorizing Marine Recovery to "conduct this emergency project due to their availability, expertise and location."

Scott Carmouche said his company recruited and then signed a contract with Resolve Marine Group of Port Everglades, Fla., to actually do the salvage work. Under the agreement, Marine Recovery acts as the Levee Board's liaison with boat owners, government agencies and insurers and has been responsible for keeping an inventory of the recovered vessels at a storage site on Levee Board property west of the Industrial Canal.

Scott Carmouche said he was introduced to Mayer, the owner of a local yacht repair and sales company that leases land from the board, by Huey a few days after Katrina wreaked havoc at the board's South Shore Harbor in eastern New Orleans and its Orleans Marina near West End.

Many of the boats docked at the marinas had been tossed ashore into parking lots while others were partially submerged or sunk.

Aware that hundreds of tenants leasing slips were represented by dozens of insurance companies, Huey said he feared that unless he brought order to the process, chaos and potential injuries might occur on board property, opening the door for liability.

With no local businesses to turn to, Huey said he drafted Mayer and Carmouche to oversee the effort to locate a single recovery firm.

Carmouche, who said he has eight years of law enforcement experience as a police officer in Florida and a deputy sheriff in California, said he and Mayer located Resolve Marine and negotiated what he described as a "fair market price" for recovery of vessels.

Under the deal, Resolve Marine was authorized to collect fees ranging from $350 to $150 per foot, depending on the size of the boat and whether the boat was on land or in the water. Carmouche said this week that his company will receive 10 percent of the fees collected, though he said he and his partner have not received "a dime yet."

The arrangement was temporarily halted early this month by a state judge in response to a lawsuit claiming that Marine Recovery was attempting to triple the going rate for boat recovery while essentially doing nothing for its fee.

The lawsuit was filed last month in state District Court in Baton Rouge by Continental Insurance Co., St. Paul Travelers Cos. and the Boat Owners Association of the United States.

The case was dismissed a few days later after an agreement was reached to allow the plaintiffs to recover their own vessels free of charge.

Big job, back pay

Responding to the lawsuit, George Carmouche claimed there was no nepotism involved in the selection of his son's company because Marine Recovery does not have a contract with the board and is not being paid by the board.

Carmouche maintains there is no conflict of interest because "no money changed hands" between the board and Marine Recovery. Furthermore, he said, since he is a first cousin to Huey's wife, there is no blood relationship with the board president.

"Neither me nor Scott are immediate family of Jim Huey," he said.

Asked whether he thought there might be a problem with having a business arrangement with the son of a consultant, Huey said he didn't have "one moment of pause."

"I don't care who profits from what if it's done legitimately and up-front. What was important to me was there was no liability or cost to the Levee Board. I would have taken anybody who could do the job.

"Others may want to make things look dirty. Shame on me if I made some wrong decisions when my plate was full. I was just trying to keep these parasites in order. I don't have any second thoughts. Could I have done it differently? Well, I had one or two or three employees doing the job of 200. I didn't have any staff, no phones, no nothing."

As for the retroactive pay, Huey said he felt he had earned it. After putting in long hours of service to the board, he said he felt that it was time to take advantage of a state law letting presidents of other levee boards collect a $1,000-a-month salary.

In a July 8 memo, Huey instructed Hearn to deduct all per-diem payments he had received, halt the per-diem pay immediately and initiate a regular monthly payment of $1,000 beginning July 19.

Carmouche said he prepared his legal opinion after consulting with state Attorney General Charles Foti. Carmouche said Foti, who could not be reached for comment, agreed there was legal precedent for Huey to collect the salary.

Foley said he was aware that Huey was interested in collecting the back pay.

But he said it was his understanding that Huey intended to get a formal ruling from Foti before collecting the money. Foley said he was particularly concerned that Huey relied on the advice of Carmouche and Metzger, two lawyers who have contracts with the agency.

"Our attorneys work for the board, not for individuals," he said. "These matters were neither agreed to or even discussed by the board. I know the president has emergency powers, but I'm not sure this fits the bill."

Foley isn't alone in his concern.

Murray said that although the heads of state agencies need to have the authority to act quickly during emergencies, "board members ought to be advised of what those actions are so they can be answerable to their constituents."

Green said that as the city struggles to recover from Katrina, it is more important than ever for the Levee Board to have the public's "utmost confidence."

"Everything we do needs to be above board and out in the open," he said.

Huey said the furor over his decisions ultimately may lead him to step down.

"I invite an inquiry," he said, "because I know no one profited from this unjustly. But maybe it's time for me to move on.

"The only thing I ask for is to be able to leave on my own, in a good light, knowing I've done the best I can do. What I don't want is for something like this to make it look like I'm running from anything."

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Frank Donze can be reached at fdonze@timespicayune.com or (504) 826-3328.